Wearables Landscape 2015 - Sample Report

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Copyright © VisionMobile 2015 - v.1.0

Content

1. The rise of IoT Developers

2. The role of developers in wearables

3. The landscape of wearables platforms and APIs

4. The profile of wearable developers

Extra – Making money with wearables

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9TH EDITION DEVELOPER ECONOMICS

3,150+ IOT DEVELOPERS SURVEYED

670+ WEARABLE DEVELOPERS

140+ COUNTRIES COVERED

50+ PLATFORMS ANALYSED

15 COMPANIES IN OUR SMARTWATCH PLATFORM LEADERBOARD

1M+ WEARABLE DEVELOPERS IN THE WORLD TODAY

Key questions that this report answers: Which key new use cases are wearable developers discovering, in the home and in the workplace?

Who is playing in the wearables platform space?

Who’s winning? What are the most promising smartwatch app platforms?

What’s the market outlook for technology and data platforms?

What are the background and motivations of wearable developers?

Through which channels can I most effectively reach out to wearable developers?

How to make money with wearables?


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TABLE OF CONTENTS

About the authors ............................................................ 3!About this report ............................................................. 5!Executive summary ......................................................... 6!The rise of IoT Developers ................................................ 8!

Developers are migrating to IoT fast ........................................... 8!Great IoT platforms offer more than just technology ................... 9!The window of opportunity for IoT platforms is open ................ 10!

The role of developers in wearables ................................... 12!Disappointment sets in ............................................................. 12!Early use cases for wearables are duds ....................................... 14!Who will discover new use cases? .............................................. 15!Emerging use cases for consumer wearables .............................. 16!Wearables in the workplace ...................................................... 19!

The landscape of wearables platforms and APIs .................. 21!Who’s playing? ......................................................................... 22!Market evolution in technology platforms .................................. 24!

The smartwatch app platform leaderboard ................................ 25!Market evolution in data platforms ........................................... 29!

The profile of wearable developers .................................... 32!How fashion influences developer demographics ....................... 32! Wearable developers focus on near-term opportunities; data is for later ......................................................................................... 34!Lone wolves, startups, or big guns: all can play .......................... 35! Mobile and wearables are hand in glove ................................... 37!How to reach wearable developers ............................................ 38!

[Extra] Making money with wearables ............................... 40!Wearables are not easy money .................................................. 40!Wearables as an engagement channel ........................................ 41!Where’s the money? Apps, devices and data compared .............. 44!Enterprises are once more the most lucrative audience ............... 45!

Conclusion .................................................................... 46!Methodology .................................................................. 48!


LIST OF GRAPHS

1. Top 3 most popular platforms among IoT developers in 5 vertical markets

2. Consumer and developer interest in wearables over time 3. Developer segment mix of wearable developers, compared to

other IoT developers 4. Targeted audience of wearable developers, compared to

other IoT developers 5. 3 types of wearables platforms 6. The landscape of wearable technology enablers (19

companies) 7. The smartwatch app platform leaderboard (15 companies) 8. The landscape of health data platforms (23 companies) 9. Demographics of wearable developers (age, gender, region),

compared to other IoT developers 10. Wearable and other IoT developers by project type

11. Wearable developers by company size, with breakdown across project type, type of involvement in IoT, and developer segment

12. Involvement of wearable developers in mobile apps 13. How wearable developers obtain information

For Team and Enterprise licensees only:

14. Earning potential of wearable developers 15. Propensity of professional wearable, other IoT, and mobile

developers to use advertising as a revenue model 16. Earning potential and revenue model popularity among

wearable developers, broken down by project type 17. Earning potential and revenue model popularity among

wearable developers, broken down by target audience


ABOUT THE AUTHORS

Stijn Schuermans Senior Business Analyst

Michael Vakulenko Strategy Director

Christina Voskoglou Director of Research and Operations

Stijn is the lead Internet of Things researcher in the VisionMobile team since 2012. He has authored over 20 reports and research notes on mobile and the Internet of Things. He focuses on understanding how technology becomes value-creating innovation, how business models affect market dynamics, and the consequences of this for corporate strategy.

Stijn holds an engineering master degree and an MBA. He has over 10 years’ experience as an engineer, product manager, strategist and business analyst.

You can reach Stijn at: [email protected] @stijnschuermans

Michael has over 18 years’ experience in mobile and telecom starting from working on first experimental 3G systems in Qualcomm. Later on Michael was part of several startups developing products in the areas of wireless, enterprise networking and mobile apps.

At VisionMobile Michael works at the cross section of business models, economics and technology where he leads strategy practice for software-centric business models in mobile, Internet of Things and Connected Car.

You can reach Michael at: [email protected] @mvakulenko

Christina leads the analyst team and oversees all VisionMobile data projects from methodology to analysis and insights generation. She is also behind VisionMobile’s developer segmentation research, as well as the Developer Economics reports and DataBoard subscription services.

Christina has more than 16 years of experience in statistical consulting, BI design and business forecasting. She holds an MSc in Statistics from the London School of Economics (LSE) and a BSc in Economics & Statistics from the University of Bath.

You can reach Christina at: [email protected] @ChristinaVoskog


INTRODUCTION

We surveyed 3,150+ IoT developers from 140+ countries in our Q2 2015 Developer Economics survey. The data from this survey, the largest research to date on IoT developers, gives us a unique perspective on how the Internet of Things developer ecosystem evolves over time. This research report delves into data on the 670+ of those developers that are active in the wearables market.

The online survey was translated in 7 languages (Chinese, French, Portuguese, Japanese, Korean, Russian, Spanish) and promoted by more than 70 leading community and media partners within the app development and IoT industry. We corrected for regional bias and segment distribution bias across our outreach channels. For more information about our methodology, please get in touch.

Wearables are moving from a period of hype to a period of deeper exploration. In this report we highlight key trends about the critical role that developers play in IoT and wearables. We also talk about

emerging wearables use cases, including wearables in the workplace.

We look at the demographics and background of wearable developers, their motivations, opportunities they’re pursuing, where they work, and how to reach them.

Wearable developers can’t do it alone. They need platforms and developer ecosystems to support and empower them in their quest for success. In this report, we identify the three types of developer platforms found in the market today: technology, device, and data platforms. We discuss the main players in each of those categories, as well as how the market is evolving. In particular, we present a leaderboard of the main smartwatch app platforms: from Apple Watch OS and Android Wear, to Baidu, Samsung, LG, and Pebble.

In the following sections, you get a flavor of what to expect from our Wearables Landscape 2015 report with just a few of the key insights.


THE END OF THE WEARABLES HYPE

In the first half of 2015, the hype and enthusiasm around wearables seems to have made way for disillusionment and a feeling of “Is this all there is to it?” The release of the Apple Watch resulted in praise for the device’s design and engineering, but also confusion about its usefulness. Concerns about security, privacy and interoperability popped up as well. Moreover, Argus Insights reports1 a decline in wearable sales after hitting a high post-holidays in January 2015.

“There’s a certain consumer fatigue with wearables,” Cavan Canavan, a wearables entrepreneur, recently wrote on TechCrunch2. “We were told they would track steps — they’re not great at it. We were told they could track sleep — not truly. And there’s a flood of devices in the market that all do the same thing. [...] Consumers can now buy a device for $15 that does the same thing as a device at $99. [...] The fitness tracker space is confusing and boring. With similar components and similar features, it’s a race to the bottom for price.”

All this doesn’t stay without consequence. Developers have grown more apprehensive about getting into wearables. n the six months between our 8th wave (Q4 2014) and 9th wave surveys (Q2 2015), the percentage of IoT developers actively targeting wearables has dropped significantly, with 7 percentage points. Wearables has dropped from being the second most popular vertical among IoT developers, to fourth place in the ranking. Developers are taking a “wait and see” attitude towards wearables, many biding their time until consumer interest picks up again.

1 http://www.argusinsights.com/wearables-demand-14-15/ 2 http://techcrunch.com/2015/09/07/commoditized-wearables/


THE LEAST ACCESSIBLE PROJECT FOR STARTUPS IS NOT HARDWARE, BUT DATA SCIENCE

Hardware is hard, or so the saying goes. Indeed, while the barrier to create device prototypes has all but disappeared, making a production-ready device at a reasonable margin is still a major challenge. To illustrate: Matt Witheiler of VC firm Flybridge Capital estimates that up to 80% of crowd- and venture funded hardware projects ship late.

Despite the challenges with producing hardware devices, 61% of wearable developers work in relatively small companies of less than 50 employees. Especially the number of developers working in teams of one is surprisingly high: 20% of wearable developers work alone, compared to 13% of other IoT developers. Mid-sized companies (under 5,000 employees) are underrepresented, indicating that wearables has yet to become a mature sector. Furthermore wearables startups have not yet grown into larger companies, although some big players (e.g. consumer electronics giants like Samsung, Sony and LG) are currently in the game.

The distribution of device makers is almost identical to that of wearable developers in general, including 17% of developers working alone. As we might expect, working on apps is fully accessible for small teams (70% of developers in companies of under 50 people). The least accessible type of project for startups is not hardware, but data science. Our data indicates that building data apps requires a larger organisation, perhaps specialized expertise, to create valuable insights from wearables data. 56% of wearable developers working on data mashups work in organisations of more than 50 people.


WEARABLES ARE NOT EASY MONEY

In virtually every report from the Developer Economics series, we highlight how difficult it is for app developers to earn a decent living. Consistently, a large majority of app developers (60% to 80%) are below the app poverty line($500 of revenue per month). Only those lucky enough to score a hit app, or those with business models far bigger than the app itself (e.g. e-commerce or service subscriptions), can build successful and sustainable businesses.

The same is true for the wearables market. Making money with apps is just as hard as in mobile. Making devices is even harder. While the barrier to create device prototypes has all but disappeared, making a production-ready device at a reasonable margin is still a major challenge. Furthermore, there’s cut-throat competition in wearables. Fitness trackers in particular have been highly commoditized (e.g. the $15 Mi Band), and even the amount of companies producing smartwatches will soon run in the hundreds.

The challenge to make money from wearables can be clearly seen in the revenue profile of wearable developers. More than one in five wearable developers who are interested in making money are not earning any revenue at all. A mere one in ten wearable developers are in a safe zone with revenues exceeding $50K per month. While these numbers are very comparable to other IoT developers, they don’t show an environment where sustainable revenues are within the reach of many, let alone a scalable business.

Wearables are certainly not ‘easy money’. But some segments of wearable developers are significantly more successful than others. Find out who in the full report!


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distilling market noise into market sense

Wearables Landscape 2015 - Sample Report

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